ZŁOMREX S.A. 2007 Business and financial performance May 8, 2008
Content 1. Introduction 2. Business overview 3. 2007 outlook 4. Q&A Appendix Pro forma financial statements 2
ZŁOMREX S.A. Introduction Section 1
Introduction Speakers [To come] Krzysztof Krzysztof Dominik Walarowski Zola Barszcz Member of the CFO Chief Board Accountant Age – 52 Age – 36 Age - 32 5 yrs with 7 yrs with 8 yrs with Złomrex Złomrex Złomrex 4
Introduction 2007 Highlights � Issuance of EUR 170m high yield bonds: January 2007 � Closing of three big acquisitions: - voestalpine Stahlhandel GmbH, Austria (VASTH): March 2007; - Stalexport S.A., Poland (STX): October 2007; - Zeljezara Split d.d., Croatia (ZJEL): December 2007; � Organic growth: - two new scrap branches: in Zabrzydowice and in Gda ń sk - 7% steel melting capacities increase at Ferrostal Łab ę dy (FERR) up to 375 thousand tonnes, - new product line at HSW-HSJ (HSJ) – special application sheets � Financial markets collapse, downgrades of ZŁOMREX (ZLX) ratings. � Change in steel seasonality profile: strong H1 and weak H2 2007 5
Introduction 2007 Highlights INCOME STATEMENT Y 2007 Y 2006 Y 2005 Y 2004 '000 PLN Revenue 3 366 004 1 942 514 976 236 1 194 898 Gross profit 429 783 254 304 95 488 175 430 Other income 10 590 5 472 3 531 2 772 Distribution expenses -125 041 -31 650 -15 691 -22 083 Administrative expenses -136 519 -75 421 -40 598 -36 866 Other expenses -22 335 -14 447 -4 725 -2 861 EBIT 156 478 138 258 38 005 116 392 Financial income 56 376 9 861 3 815 8 761 Financial expenses -106 213 -34 904 -20 852 -17 647 Net financing costs -49 837 -25 043 -17 037 -8 886 Excess in the net fair value of acquired assets over cost 119 653 5 894 0 101 036 Profit before tax 226 294 119 109 20 968 208 542 Income tax expense -20 457 -22 009 -4 098 -3 659 Profit for the period 205 837 97 100 16 870 204 883 Depreciation and amortyzation -60 281 -34 622 -22 112 -19 339 EBITDA 216 759 172 880 60 117 135 731 6
Introduction 2007 Highlights MAIN METRICS Y 2007 Y 2006 Y 2005 Y 2004 Liquidity ratio 1,28 1,00 1,13 1,17 Quick ratio 0,68 0,53 0,70 0,68 Inventories turnover (days) 86 62 43 40 Receivables turnover (days) 56 55 58 46 EBITDA margin 6,4% 8,9% 6,2% 11,4% Nett profit margin 6,1% 5,0% 1,7% 17,1% Equity 689 568 409 078 294 980 277 820 Net debt 943 351 392 649 197 685 184 861 Net debt / EBITDA 4,4 2,3 3,3 1,4 7
Introduction Strategy � Emphasis on distribution of steel products – further development and integration of retail division � Strengthening the position in production of special application and niche products � Decrease of indebtedness and strengthening equity base before any material acquisitions or expansionary CAPEX. 8
ZŁOMREX S.A. Business overview Section 2
Business overview Business environment CRUDE STEEL PRODUCTION Y 2007 % YoY Y 2006 Y 2005 Y 2004 ‘000 000 tonnes Poland 10,6 6% 10,0 8,3 10,1 EU (27) 210,2 1% 207,6 195,5 202,3 China 489,2 16% 422,7 355,8 280,5 World 1 344,0 8% 1 244,0 1 142,0 1 069,0 10
Business overview Business environment PRODUCTION OF FINISHED PRODUCTS Y 2007 % YoY Y 2006 Y 2005 Y 2004 ‘000 000 tonnes Poland, thereof: 10,3 3% 10,0 8,1 9,8 flat products 4,5 1% 4,4 3,6 4,4 long produts 5,8 4% 5,6 4,6 5,4 STEEL USE Y 2007 % YoY Y 2006 Y 2005 Y 2004 ‘000 000 tonnes Poland, thereof: 12,0 23% 9,7 7,4 7,7 flat products 6,1 23% 5,0 3,8 4,0 long produts 5,9 23% 4,8 3,6 3,7 11
Business overview Business environment AVERAGE UNIT PRICES Y 2007 % YoY Y 2006 Y 2005 Y 2004 PLN / Tonne Scrap metal 771 7% 719 631 775 Billets 1 672 13% 1 483 1 387 1 471 Bars 2 000 9% 1 833 1 565 1 965 � Another year with a positive steel business environment with strong demand in China, India, Russia, Central Europe and Middle East; growth in global production and consumption. � Strong demand reflected in increase in production and in unit prices � In Polish market unit prices under pressure resulting from strengthening zloty. Only in 2007 prices reached 2004 level after 2005’s downturn. � In 2007 zloty denominated unit prices increased more than the rate of inflation � Spread between scrap price and billets and bars price widened allowing good production profitability. 12
Business overview Business environment EXCHANGE RATES Dec-2007 Dec-2006 Dec-2005 Dec-2004 Dec-2003 PLN EUR/PLN 3,58 3,83 3,86 4,08 4,72 % change -7% -1% -5% -14% USD/PLN 2,44 2,91 3,26 2,99 3,74 % change -16% -11% 9% -20% � EUR / PLN: 24% during 2004-2007 � USD / PLN: 35 % during 2004-2007 13
Business overview 2007 performance drivers 2007 2006 SALES NEW ACQUISITIONS’ CONTRIBUTION ZLOMREX REPORTED REPORTED AS IN 2006 VASTH STX ZJEL TOTAL Tonnes SCRAP 194 989 194 989 0 0 0 0 297 484 BILLETS 209 106 204 519 0 4 587 0 4 587 207 168 FINISHED PRODUCTS 911 956 542 855 330 485 38 616 0 369 101 497 067 2007 2006 SALES NEW ACQUISITIONS’ CONTRIBUTION ZLOMREX REPORTED REPORTED AS IN 2006 VASTH STX ZJEL TOTAL 000 PLN SCRAP 150 302 150 302 0 0 0 0 213 974 BILLETS 349 537 341 868 0 7 669 0 7 669 307 290 FINISHED PRODUCTS 2 472 435 1 324 295 1 035 152 112 988 0 1 148 140 1 063 269 OTHER 393 308 393 308 0 0 0 0 357 981 14
Business overview 2007 performance drivers 2007 2006 SCRAP NEW ACQUISITIONS’ CONTRIBUTION ZLOMREX REPORTED REPORTED AS IN 2006 VASTH STX ZJEL TOTAL Tonnes PURCHASES 880 465 880 465 0 0 0 0 882 420 INTERNAL USE 712 398 712 398 0 0 0 0 606 116 SALES 194 989 194 989 0 0 0 0 297 484 SALES ('000 PLN) 150 302 150 302 0 0 0 0 213 974 2007 2006 NEW ACQUISITIONS’ CONTRIBUTION BILLETS REPORTED REPORTED ZLOMREX AS IN 2006 VASTH STX ZJEL TOTAL Tonnes PURCHASES 33 353 33 353 0 0 0 0 129 930 PRODUCTION 622 311 622 311 0 0 0 0 521 977 INTERNAL USE 446 558 446 558 0 0 0 0 444 739 SALES 209 106 204 519 0 4 587 0 4 587 207 168 SALES ('000 PLN) 349 537 341 868 0 7 669 0 7 669 307 290 15
Business overview 2007 performance drivers 2007 2006 FINISHED NEW ACQUISITIONS’ CONTRIBUTION PRODUCTS REPORTED REPORTED ZLOMREX AS IN 2006 VASTH STX ZJEL TOTAL Tonnes PRODUCTION 393 518 393 518 0 0 0 0 387 106 BULK SALES 515 385 376 511 119 453 19 421 0 138 874 395 247 RETAIL SALES 396 571 166 344 211 032 19 195 0 230 227 101 820 SALES ('000 PLN) 2 472 435 1 324 295 1 035 152 112 988 0 1 148 140 1 063 269 2007 2006 NEW ACQUISITIONS’ CONTRIBUTION OTHER REPORTED REPORTED ZLOMREX AS IN 2006 VASTH STX ZJEL TOTAL 000 PLN SALES 393 308 393 308 0 0 0 0 357 981 16
Business overview 2007 Quarterly Performance SALES Q 1 Q 2 Q 3 Q 4 ‘000 Tonnes SCRAP 48 60 47 40 BILLETS 52 45 48 64 BULK SALES 114 125 130 146 RETAIL SALES 44 140 131 82 SALES AND EBITDA Q 1 Q 2 Q 3 Q 4 000 PLN SALES 588 711 980 530 951 215 845 588 EBITDA 65 381 73 391 50 999 26 361 17
Business overview Proforma Numbers EBITDA '000 PLN ADJUSTED PRO FORMA 247 177 Subgroups for non-consolidation periods with positive EBITDA, thereof: VASTH Q1 2007 -14 534 Other -1 670 Consolidation adjustments, thereof: Settlement of fair value of VASTH inventories at the acquisition to the P&L statement -14 214 REPORTED 216 759 Subgroups for non-consolidation periods with positive EBITDA, thereof: VASTH Q1 2007 14 534 Other 1 670 Subgroups for non-consolidation periods with negative EBITDA, thereof: ZJEL -22 797 STX -9 477 Pro forma adjustments, thereof: VASTH exchange rate -198 PRO FORMA 200 491 18
Business overview Proforma Metrics PROFORMA METRICS Y 2007 DEBT 1 206 767 VASTH DEFERRED PAYMENT 46 765 TOTAL CASH, thereof: 263 416 - restricted & limited 114 012 - free cash 149 404 NET DEBT 1 104 128 EBITDA 216 759 PRO FORMA EBITDA 200 491 ADJUSTED PRO FORMA EBITDA 247 177 Net debt / EBITDA 5,1 Net debt / PRO FORMA EBITDA 5,5 Net debt / ADJUSTED PRO FORMA EBITDA 4,5 � Adjusted pro forma (APF) EBITDA the best indicator of ZLOMREX profitability in 2007 � APF EBITDA to be increased by positive STX and ZJEL EBITDAS in 2008 19
Business overview Progressive integration of acquired businesses � All retail companies consolidated under ZSS. Integration process is pending � voestalpine Stahlhandel GmbH– positive performance in 2007 � Zeljezara Split d.d. – complete change of management and working capital injection lead ZJEL on positive territory in March 2008; � Stalepxport – changes of management and other necessary layoffs. The company became profitable at EBITDA level since Q4 2007. 20
ZŁOMREX S.A. 2008 outlook Section 3
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